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Trade and the Spatial Distribution of Transport Infrastructure

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  • Gabriel Felbermayr
  • Alexander Tarasov
  • Gabriel J. Felbermayr

Abstract

The distribution of transport infrastructure across space is the outcome of deliberate government planning that reflects a desire to unlock the welfare gains from regional economic integration. Yet, despite being one of the oldest government activities, the economic forces shaping the endogenous emergence of infrastructure have not been rigorously studied. This paper provides a stylized analytical framework of open economies in which planners decide non-cooperatively on transport infrastructure investments across continuous space. Allowing for intra- and international trade, the resulting equilibrium investment schedule features underinvestment that turns out particularly severe in border regions and that is amplified by the presence of discrete border costs. In European data, the mechanism explains about a fifth of the border effect identified in a conventionally specified gravity regression. The framework sheds light on the welfare costs of second best investment schedules, on the effects of intercontinental trade or of privatized infrastructure provision.

Suggested Citation

  • Gabriel Felbermayr & Alexander Tarasov & Gabriel J. Felbermayr, 2015. "Trade and the Spatial Distribution of Transport Infrastructure," CESifo Working Paper Series 5634, CESifo.
    • Handle: RePEc:ces:ceswps:_5634
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    Cited by:

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    4. Rym Aloui & Aurélien Eyquem, 2020. "The Welfare Gains of Cooperative Public Infrastructure Policies: A Trade and Supply-Side View," Annals of Economics and Statistics, GENES, issue 140, pages 27-44.
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    7. Roberto Bonfatti & Yuan Gu & Steven (S.) Poelhekke, 2019. "Priority Roads: the Political Economy of Africa's Interior-to-Coast Roads," Tinbergen Institute Discussion Papers 19-006/VIII, Tinbergen Institute.
    8. Arghya Ghosh & Kieron Meagher, 2011. "The Political Economy of Infrastructure Investment: Competition, Collusion and Uncertainty," ANU Working Papers in Economics and Econometrics 2011-556, Australian National University, College of Business and Economics, School of Economics.
    9. Meseret Chanieabate & Hai He & Chuyue Guo & Betelhem Abrahamgeremew & Yuanji Huang, 2023. "Examining the Relationship between Transportation Infrastructure, Urbanization Level and Rural-Urban Income Gap in China," Sustainability, MDPI, vol. 15(10), pages 1-20, May.
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    12. Han, Zheng & Li, Hongtao, 2022. "Transportation infrastructure and trade," Japan and the World Economy, Elsevier, vol. 64(C).
    13. Santamaria, Marta, 2020. "Reshaping Infrastructure : Evidence from the division of Germany," CAGE Online Working Paper Series 456, Competitive Advantage in the Global Economy (CAGE).
    14. Rémi Jedwab & Adam Storeygard, 2022. "The Average and Heterogeneous Effects of Transportation Investments: Evidence from Sub-Saharan Africa 1960–2010," Journal of the European Economic Association, European Economic Association, vol. 20(1), pages 1-38.
    15. Dias, Lucas & Haddad, Eduardo & Maggi, Andrés, 2020. "Optimal Road Network and the Gains from Intranational Trade," TD NEREUS 15-2020, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS).
    16. Zheng, Han & Hongtao, Li, 2022. "Transportation Infrastructure and Trade," Discussion paper series HIAS-E-124, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    17. Kailei Li & Han Bai & Xiang Yan & Liang Zhao & Xiuguang Wang, 2023. "Cooperative Efficiency Evaluation System for Intelligent Transportation Facilities Based on the Variable Weight Matter Element Extension," Sustainability, MDPI, vol. 15(3), pages 1-16, January.
    18. Lorz, Oliver, 2020. "Investment in trade facilitating infrastructure: A political-economy analysis," European Journal of Political Economy, Elsevier, vol. 65(C).
    19. Meurers, Martin & Moenius, Johannes, 2018. "Optimal Public Investment in Economic Centers and the Periphery," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181579, Verein für Socialpolitik / German Economic Association.
    20. Rym Aloui & Aurélien Eyquem, 2020. "The Welfare Gains of Cooperative Public Infrastructure Policies: A Trade and Supply-Side View," Annals of Economics and Statistics, GENES, issue 140, pages 27-44.
    21. Akihiko Yanase & Ngo Van Long & Ngo Van Long, 2020. "Trade Costs and Strategic Investment in Infrastructure in a Dynamic Global Economy with Symmetric Countries," CESifo Working Paper Series 8707, CESifo.
    22. Hannes Thees, 2020. "Towards Local Sustainability of Mega Infrastructure: Reviewing Research on the New Silk Road," Sustainability, MDPI, vol. 12(24), pages 1-35, December.
    23. Meng, Xuechen & Li, Jianfeng & Zhou, Xiaoying & Yao, Xiaoyang, 2024. "Transportation infrastructure, market access, and firms’ export competition: Evidence from China," Finance Research Letters, Elsevier, vol. 61(C).
    24. Gabriel Felbermayr & Jasmin Katrin Gröschl & Thomas Steinwachs, 2016. "Handelseffekte von Grenzkontrollen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(05), pages 18-27, March.
    25. del Rosal, Ignacio & Moura, Ticiana Grecco Zanon, 2022. "The effect of shipping connectivity on seaborne containerised export flows," Transport Policy, Elsevier, vol. 118(C), pages 143-151.

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    More about this item

    Keywords

    economic geography; international trade; infrastructure investment; border effect puzzle;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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